Learn how GS1 standards and PEPPOL messaging standards work together as part of the purchase to pay process
What is PEPPOL?
Date: July 27, 2014
Category: Guest opinion piece
The eProcurement Strategy has mandated the use of GS1 Standards and PEPPOL (Pan European Public Procurement On-Line) in the NHS.
Guest comment from Aideen Ryan, IBM Project Executive.
This article is addressed to all those involved in NHS procurement and supply to the NHS and seeks to answer:
- What is PEPPOL?
- What’s in it for me?
PEPPOL is not a new concept. In 2012 it was made mandatory in Norway, and it's been also used within public procurement in other countries since 2011. Many millions of PEPPOL transactions are processed every month, in a Business-to-Government, a Business-to-Business context and in Norway it is also used for Government-to-Citizen purposes. So while it is a relatively new concept for the UK, PEPPOL is already a mature technology which is open for business today.
What does an NHS Procurement leader need to know about PEPPOL?
PEPPOL enables the NHS and its suppliers to use standardised connection for eOrdering, eInvoicing, electronic Credit Notes and Advance Shipping Notifications.
In a traditional EDI (Electronic Data Interchange) environment, each supplier would have needed an individually negotiated contract to provide a hard-coded service to each buyer.
So each trust would have needed an individual EDI connection to each of their suppliers, large and small. Even if the all the hospitals were purchasing from all the same suppliers, every new supplier would have needed a new connection (at a cost to the supplier).
PEPPOL means that a trust can have one single eProcurement link to the outside world, via which they can trade with current future suppliers, large and small, in the UK as well as internationally. A supplier also needs only one connection to PEPPOL, in order to reach not only all NHS customers, but also all other PEPPOL-connected trading partners at home and abroad.
Very importantly for a PEPPOL enabled entity (trust or supplier), there are NO additional set-up costs incurred in order to begin trading with a new partner. So long as both buyer and seller have PEPPOL access, they can trade together.
If NHS were to focus only on the largest suppliers making up the bulk of the orders today, and deprioritise the long tail of possibly many thousands of smaller suppliers, then the overall savings from PEPPOL implementation will be undermined by them generating manual work. The more of these smaller suppliers that can be encouraged to be PEPPOL-ready at an early date, the sooner that overall NHS cost savings can be achieved.
What are the technical requirements to set up PEPPOL?
Some trusts and suppliers will already have non-PEPPOL eProcurement connection formats in use. These will have to be replaced or re-programmed to translate existing formats to the PEPPOL standard. Replacement or reprogramming will represent a cost which should be considered in the overall eProcurement business case.
How does one access point provider's PEPPOL differ from another's?
PEPPOL is a standardised service, so there should be no technical difference between the PEPPOL service offered by different providers, other than price. As with any buying decision in the IT field, the reputation and reliability of the provider should be considered. If a PEPPOL gateway is offline, no traffic can be sent or received. Price savings in provider selection could then quickly turn into an expense.
What about Oracle / SAP / ERP integration?
PEPPOL can be incorporated into ERP solutions at trust or supplier side. There is a specific security protocol used for PEPPOL and most ERP systems will have a communication module which can be configured to send and receive to this protocol. If a smaller supplier or trust did not wish to integrate PEPPOL into an ERP system, then a simple web gateway could be set up to integrate with PEPPOL.
How is PEPPOL usage charged?
Charges for provision of PEPPOL differ by provider, the most common involves a one-off setup charge and a monthly use-based charge (based on transaction volume). There may be an additional upfront charge for the programming needed to translate from existing EDI formats to PEPPOL.
It is feasible to provide PEPPOL services with zero upfront cost, however this would mean rolling the actual costs into a higher use charges.
There may also be providers who offer fully free-of-charge PEPPOL service, such business models are generally funded by cross-subsidising, i.e. by tying in the client to buying other products such as invoice financing. Also, if one customer is receiving free service, effectively the costs of its provision are being spread thinly across all other revenue-generating clients.
What information will trusts need to get a quotation for NHS PEPPOL provision?
1) Specifications of any existing EDI formats you currently use and wish to continue using in tandem with PEPPOL (if applicable)
2) Monthly volume of transactions
3) ERP integration - If required, which ERP system, (including which release or version), via which ERP provider?
What does an NHS Supplier need to know about PEPPOL?
PEPPOL is access point provider agnostic. It shouldn't matter via which access point provider the customer or supplier gain PEPPOL access.
Suppliers will probably be familiar with many other forms of electronic trade, including EDI and Trading Platforms. The primary difference between PEPPOL and more traditional systems is that you set up the connection once, and have no additional costs to on-board new trading partners, as all PEPPOL exchanges happen in one agreed standardised format. It is true that Trading Platforms would lay claim to this "benefit" also, however they will also insist that every trading party needs to join up to their closed network.
What are the non-NHS benefits of PEPPOL for suppliers?
The NHS adoption of PEPPOL will lead to a wide and fast expansion of common eProcurement capabilities within NHS-focussed suppliers, many of whom probably also trade with each other.
Today, this trade is either paper-based or happens via traditional or closed platform means.
The benefits of PEPPOL go far beyond NHS trade, and a business that can take advantage of NHS PEPPOL adoption to increase their use of eProcurement in their day-to-day trade will realise savings previously only accessible by companies who had the financial clout to force their trade partners into a restrictive electronic trade environment.
You can view an explanatory video on PEPPOL here
Aideen Ryan, IBM Project Executive
Then how do GS1 and PEPPOL standards fit together as part of the purchase to pay (P2P) process?
GS1 standards are the unique identifiers used to accurately identify any person, product, or place throughout the P2P process. They are used to ensure that the correct product is ordered and that the product master data is accurate, the product is sent to the right location, and also received by the right person(s).
This information is shared between the NHS trust and their suppliers via the GS1 Global Data Synchronisation Network and GS1 LocationManager.
Purchase orders and invoices are then exchanged electronically via the PEPPOL networking using PEPPOL messaging standards as described above.
You can find out more about how the information flows across the network by downloading the P2P roadmap below, or by joining one of our training sessions to learn more.